As in sport, we improve our performance by competing against others. If you run by yourself you will never know if you will win a race.
The same applies to business. For example, suppose you operate a Paint and Panel shop. You might think your business is doing well by achieving a gross profit percentage of 30 percent, but what if similar businesses in the industry are achieving a gross profit of 45 percent? That would suggest there is significant room for improvement. Benchmarking gives you the goals to aspire to.
Benchmarking is an important component for business development because it allows you to understand what it takes to be the best in your field, and what it means to be a leader in your industry.
Benchmarking allows you to:
- Search for innovative ideas and highly effective operating practices and then apply these to your business.
- Look at your own organisation and make the necessary improvements to match or better your competitors.
- Recognise your business’ shortcomings and develop business strategy to eliminate them.
- Acknowledge others are doing a better job in some areas, learn how they are doing it and then implement and adapt those practices to your business.
PricewaterhouseCoopers “Trendsetter Barometer Survey” noted that “fast growth companies who used benchmarking information to measure business performance against their peers achieved 69% faster growth and 45% greater productivity over those who did not.”
Planning / Analysis
This element of business management is poorly understood, largely neglected but can generate huge rewards. Without over-simplifying it, analysis allows you to identify what strategy will generate the largest return, and then quantify the impact of your decisions on cash and profitability prior to implementation.
Top managers systematically review and analyse financial results, key performance indicators and benchmarks prior to making strategic / key discussions. Good analysis allows you to:
- Identify key performance measures that drive your business
- Use information to develop sound financial and business strategies
- Learn to communicate and measure your business financial performance clearly
- Clarify the impact of changes to the bottom line
- Communicate effectively between your business coach, accountant and bank
- Understand how banks measures business performance
- Learn the most effective methods to improve your cash flow
While analysis is very rewarding it can be very complex and is best left to specialists.
Pleasecontact us if you would like help to learn more above Benchmarking and understanding what's going on in your business.